Cost Proportion

Cost Proportion Level

Cost Proportion within Margin Costing is a quality metric meant to indicate the level of accuracy to which the Job Costing of Parts has been accounted for. Three levels can be shown, each more secure than the last:

• Level 1: Naive Part Count
• Level 2: Smart Rack Proportions and Naive Part Count
• Level 3: Smart Rack Proportions and Smart Part Proportions

Naive Part Count

Naive Part Count is the most basic cost count.

• Found by looking at the total cost of the Work Order and dividing it by the amount of Parts in that Work Order.
• It is meant to count the cost of small Work Orders quickly.
• Costs are distributed equally based on the number of Parts.
• Used when Parts are not on a Rack.

Smart Rack Proportions

Smart Rack Proportions is the second level that can be added to cost counting.

• Measures the amount of Parts on each Rack being used for the Work Order.
• Costs are first distributed among Racks based on Rack capacity.
• Then distributed among Parts within each Rack based on part count.
• Used when all Parts are on Racks but parts per Rack is not defined.
• It is helpful for Work Orders that require many Racks.

Smart Part Proportions

The Smart Part Proportions is an improved style of cost counting and looks at the details of each part.

• In most cases it will give greater financial weight to parts that are bigger, are made of more expensive materials, and have undergone more treatments.
• It will be most useful for Work Orders that have many Parts that are very different.
• Takes into account:
  • Rack capacity and count
  • Parts per rack configuration
  • Station rack capacity

Level Readout

The readout for Cost Proportion level shown here becomes visible when the entries on the above Cost Per Station bar are selected: